FSI's Q3 Net Income Plunges Amid Rising Costs, Despite Sales Growth

Ticker: FSI · Form: 10-Q · Filed: Nov 14, 2025 · CIK: 1069394

Flexible Solutions International INC 10-Q Filing Summary
FieldDetail
CompanyFlexible Solutions International INC (FSI)
Form Type10-Q
Filed DateNov 14, 2025
Risk Levelhigh
Pages15
Reading Time17 min
Key Dollar Amounts$0.001, $0.01
Sentimentbearish

Sentiment: bearish

Topics: Specialty Chemicals, Water Conservation, Earnings Miss, Operating Expenses, Profitability Decline, Small Cap, R&D Spending

Related Tickers: FSI

TL;DR

**FSI's Q3 loss is a red flag; rising costs are eating into sales growth, making it a risky bet right now.**

AI Summary

FLEXIBLE SOLUTIONS INTERNATIONAL INC. (FSI) reported a significant decline in net income attributable to the company for the three months ended September 30, 2025, falling to a loss of $503,358, a sharp contrast to the $611,858 net income in the same period of 2024. This was primarily driven by a decrease in gross profit from $3,806,816 in Q3 2024 to $2,523,775 in Q3 2025, despite product sales increasing from $9,314,937 to $10,556,291. For the nine months ended September 30, 2025, total sales increased slightly to $29,397,115 from $29,068,548 in 2024, bolstered by $2,500,000 in research and development services, which were absent in the prior year. However, net income attributable to FSI for the nine-month period decreased by 47.1% to $1,247,820 from $2,358,880. Operating expenses rose across both periods, with a notable increase in research and development expenses from $27,806 to $255,657 in the three-month period and from $216,934 to $529,705 for the nine-month period. The company's cash position improved, with cash at $8,481,652 as of September 30, 2025, up from $7,631,055 at December 31, 2024, largely due to cash provided by operating activities totaling $6,757,198 for the nine months.

Why It Matters

FSI's substantial drop in net income, particularly the Q3 loss, signals potential operational inefficiencies or pricing pressures that could impact investor confidence. While sales increased, the disproportionate rise in cost of sales and operating expenses suggests a squeeze on margins, which could make FSI less competitive against rivals in the specialty chemicals and water conservation sectors. Employees might face pressure if profitability continues to decline, and customers could see price adjustments. The broader market may view this as a cautionary tale for small-cap chemical companies navigating rising input costs and increased R&D investments.

Risk Assessment

Risk Level: high — The company reported a net loss attributable to Flexible Solutions International Inc. of $503,358 for the three months ended September 30, 2025, a significant decline from a net income of $611,858 in the prior year. This, coupled with a 47.1% decrease in nine-month net income attributable to FSI, indicates substantial profitability challenges and increased operational risk.

Analyst Insight

Investors should exercise caution and thoroughly investigate the drivers behind the increased cost of sales and operating expenses. Consider holding off on new investments until FSI demonstrates a clear path to improved profitability and margin recovery, or if the stock price reflects these increased risks.

Financial Highlights

debt To Equity
N/A
revenue
$29,397,115
operating Margin
N/A
total Assets
N/A
total Debt
N/A
net Income
-$503,358
eps
N/A
gross Margin
23.9%
cash Position
$8,481,652
revenue Growth
+1.1%

Revenue Breakdown

SegmentRevenueGrowth
Product Sales$10,556,291+13.3%
Research and Development Services$2,500,000N/A

Key Numbers

Key Players & Entities

FAQ

What caused Flexible Solutions International Inc.'s net income to decline in Q3 2025?

Flexible Solutions International Inc.'s net income declined to a loss of $503,358 in Q3 2025, primarily due to a decrease in gross profit from $3,806,816 in Q3 2024 to $2,523,775 in Q3 2025, coupled with a significant increase in operating expenses, including research and development costs rising from $27,806 to $255,657.

How did FSI's sales perform for the nine months ended September 30, 2025?

For the nine months ended September 30, 2025, FSI's total sales increased slightly to $29,397,115, up from $29,068,548 in the same period of 2024. This increase was partly driven by $2,500,000 in research and development services, which were not present in the prior year.

What is the current cash position of Flexible Solutions International Inc.?

As of September 30, 2025, Flexible Solutions International Inc. reported a cash balance of $8,481,652. This represents an increase from $7,631,055 at December 31, 2024, indicating an improved liquidity position.

What are the key risks highlighted in Flexible Solutions International Inc.'s 10-Q filing?

The 10-Q filing highlights several risks, including increased competitive pressures, potential increases in interest rates or cost of borrowing, deterioration in economic conditions, adverse legislation or regulation, loss of customers, inability to achieve future sales levels, unavailability of funds for capital expenditures, operational inefficiencies, and new tariffs on raw materials from China.

How has FSI's research and development spending changed?

FSI's research and development spending significantly increased, rising from $27,806 in the three months ended September 30, 2024, to $255,657 in the same period of 2025. For the nine-month period, R&D expenses grew from $216,934 in 2024 to $529,705 in 2025.

What is the impact of non-controlling interests on FSI's net income?

For the three months ended September 30, 2025, net income attributable to non-controlling interests was a negative $890,046, which significantly impacted the net income attributable to Flexible Solutions International Inc., turning it into a loss of $503,358. For the nine-month period, net income attributable to non-controlling interests was a negative $1,020,061.

What is Flexible Solutions International Inc.'s strategy regarding its manufacturing building?

Flexible Solutions International Inc., through its 80% interest in 317 Mendota LLC, purchased a large manufacturing building. Part of this building is occupied by ENP Investments, freeing up space in another building for NanoChem. The filing notes that this manufacturing building was sold after September 30, 2025.

What types of products does Flexible Solutions International Inc. manufacture and market?

Flexible Solutions International Inc. develops, manufactures, and markets specialty chemicals such as HEATSAVR for swimming pools and WATERSAVR for water conservation. They also produce thermal polyaspartate biopolymers (TPAs) for corrosion prevention, fertilizer enhancement, and additives for detergents and pesticides, along with food grade products and nitrogen conservation products for agriculture.

How many common shares of FSI were outstanding as of November 14, 2025?

As of November 14, 2025, there were 12,692,498 common shares of Flexible Solutions International Inc. outstanding. This is an increase from 12,515,532 common shares outstanding at December 31, 2024.

What was the change in FSI's total liabilities from December 31, 2024, to September 30, 2025?

Flexible Solutions International Inc.'s total liabilities decreased from $18,602,553 at December 31, 2024, to $15,360,969 at September 30, 2025. This reduction was primarily driven by a decrease in short-term lines of credit and long-term debt.

Risk Factors

Industry Context

Flexible Solutions International Inc. operates in a competitive landscape where companies are increasingly investing in research and development to innovate and maintain market share. The demand for specialized solutions, particularly those supported by R&D services, appears to be growing, as evidenced by FSI's new revenue stream. However, the industry is also sensitive to economic cycles and input costs, which can impact gross margins.

Regulatory Implications

As a publicly traded company, FSI is subject to SEC regulations and accounting standards. The significant shift in profitability and the increase in R&D expenses may attract scrutiny from investors and analysts regarding the company's financial health and strategic investments. Compliance with reporting requirements remains paramount.

What Investors Should Do

  1. Monitor R&D Investment Returns
  2. Analyze Cost of Goods Sold (COGS)
  3. Evaluate Debt Repayment Strategy
  4. Assess Revenue Diversification

Key Dates

Glossary

Net Income Attributable to the Company
The portion of a company's profit that is available to its common shareholders after all expenses, interest, taxes, and preferred stock dividends have been paid. (Key indicator of profitability for FSI, which has turned into a loss in Q3 2025.)
Gross Profit
The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. (Shows a significant decline, indicating issues with cost of goods sold or pricing strategy.)
Operating Expenses
Expenses a business incurs through normal business operations. This includes rent, equipment, salaries, marketing, etc. (Increased R&D expenses are a significant component of the rise in operating expenses, impacting net income.)
Cash Provided by Operating Activities
The amount of cash generated from a company's normal business operations over a period of time. (A primary source of liquidity for FSI, though it decreased slightly in the nine-month period of 2025 compared to 2024.)
Cash Used in Financing Activities
The amount of cash used by a company to fund its operations and investments, typically through debt, equity, and dividends. (Increased significantly in 2025, primarily due to debt repayments and dividends, impacting overall cash flow.)

Year-Over-Year Comparison

Compared to the prior year, Flexible Solutions International Inc. has experienced a significant deterioration in profitability, with Q3 2025 reporting a net loss of $503,358 versus a net income of $611,858 in Q3 2024. While total sales for the nine-month period saw a slight increase to $29,397,115, driven by new R&D services, gross profit declined sharply from $3,806,816 to $2,523,775 in Q3, indicating margin compression. Operating expenses, particularly R&D, have risen, further pressuring net income. The company's cash position has improved, but cash used in financing activities has also increased substantially.

Filing Stats: 4,354 words · 17 min read · ~15 pages · Grade level 15.9 · Accepted 2025-11-14 16:31:24

Key Financial Figures

Filing Documents

Financial Statements

Financial Statements. 3 (a) Unaudited Condensed Interim Consolidated Balance Sheets at September 30, 2025 and December 31, 2024. 3 (b) Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended September 30, 2025 and 2024. 4 (c) Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Income for the Nine Months Ended September 30, 2025 and 2024. 5 (d) Unaudited Condensed Interim Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024. 6 (e) Unaudited Condensed Interim Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024. 7 (f) Notes to Unaudited Condensed Interim Consolidated Financial Statements for the Period Ended September 30, 2025. 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operation

Management's Discussion and Analysis of Financial Condition and Results of Operation. 20 Item 4.

Controls and Procedures

Controls and Procedures. 23 PART II. OTHER INFORMATION 24 Item 5. Other Information. 24 Item 6. Exhibits. 24

SIGNATURES

SIGNATURES 25 1 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are "forward-looking statements" for the purposes of the federal and state securities laws, including, but not limited to: any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking "continue," "believe," "expect" or "anticipate" or other similar words. These forward-looking information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include but are not limited to: Increased competitive pressures from existing competitors and new entrants; Increases in interest rates or our cost of borrowing or a default under any material debt agreement; Deterioration in general or regional economic conditions; Adverse

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